an international trip), and if there are any COVID test requirements and fees.4 Give yourself spending money. Cinneah recommends budgeting for daily spending money so you're not relying on credit cards or savings to fund your daily expenses.
5 Add it all up. This is what you want to have saved in your travel fund (more on this in Chapter 5).
Now that you know “how much,” adjust your SMART goals accordingly.
For the Love of Money: Money Goals with a Partner
If you are partnered up, it's great to do this exercise on your own, but then you'll also want to include your partner in your goal planning. You might have some shared goals and some goals that are just your own. You might agree on the priority ranking for some and disagree for others. This is all okay! What's most important is that you have a conversation and come up with a plan together.
Maybe you contribute jointly to certain goals and then you each contribute to your respective individual goals. If you disagree on the ranking of a goal, you might compromise and contribute to two at the same time and/or encourage one another to contribute to individual goals. There are a million and one ways to figure it out, and know that the plan you come up with isn't set in stone. Try some things out and see how they go. Adjust from there.
Decide How Many Goals to Work Toward
If we focus on one goal, we achieve it more quickly. That being said, choosing one goal can be really difficult when we have lots of things we are excited to accomplish. Also, a goal like retirement is something we may be working toward until we get there, and we probably want to make other things happen in the meantime.
On the other hand, if we focus on too many goals at once, we won't see any real meaningful progress because the money is spread across too many areas. That's not motivating. Choosing two to five goals is usually a good sweet spot.
Write down the goals you plan to work toward. If you choose to work toward three goals, write the top three goals from your list. If seeing it this way has you wanting to reprioritize, go for it!
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Make a Preliminary Plan
Break each goal you plan to work toward down into monthly contributions. You can do this by dividing the amount you need for the goal by its timeline. If I want to save $3,000 for my rainy-day fund this year, that's $250 per month ($3,000/12). If I want $50,000 for a down payment in three years, that's $1,389 per month ($50,000/3 years = $16,667 per year/12 months = $1,389). If you prefer to contribute biweekly or weekly, do that instead.
It might be unrealistic to save $250 or $1,389 per month. That's just a starting point to give you an idea. You can start small and go up from there. If you receive one-time or less frequent sources of income like a bonus, commission, inheritance, or payout, that can also go toward your goals.
Important Reminder: Not everything has to go toward your goals. You might decide on a celebration gift for part of the money as well.
When making your preliminary plan you'll also want to decide where the money goes. If you're paying down debt, the money will go directly to your debt payments, but if you are building your rainy-day fund, you'll want to have a savings account for that.
| Goal | How Much | How Often | Where |
|---|---|---|---|
| Example: Minimum Rainy-Day Fund | $250 | Monthly | HYSA (high-yield savings account) |
Use Your Goals to Focus
There is so much personal finance information and advice out there. This information overload can be overwhelming and lead to analysis paralysis, and becomes a big part of why many of us (myself included) don't get started financial adulting. Part of being a financial adult is knowing what you need to know and what you do not need to know. Saying “see ya” to all the info we don't need to know makes this manageable.
I sat down with Elyse Steinhaus, who leads finance content at theSkimm, because theSkimm is all about “skimming down” big topics to what we need to know to live our smartest lives. Money is an important part of that. Elyse recommends paying attention to personal finance information that affects your specific goals and not stressing about the rest.
“If you're buying a home, you'll want to be watching average mortgage rates and what the housing market is doing” she says (more on this in Chapter 9). This information will help you make a decision that will pay off in the long-run and directly impact your goals, “like deciding how much you want to save and what you need to do to get your credit score up, so you can qualify for the best rate possible.” You don't need to read about it all over. You can stick with some sources and experts you trust. This book and the Financial Adulting toolkit are a great place to start.
Your Financial Adulting Action Items
List your financial goals and rank them by priority, starting with #1. Remember – try not to compare yourself with others!
Turn each of your goals into a SMART goal so you know exactly how much you need and by when you want to achieve each goal (it's okay to guesstimate until you have more info!).
Decide how many goals to work toward at once.
Make a preliminary plan to achieve your goals (we'll make sure these plans are workable in the next few chapters).
Big congrats on mapping out your goals! This is a big step and a great starting point. But we can't know if these plans for our goals are workable without looking at our income and expenses. We'll come back to these goals later. Budgeting, here we come …
Notes
1 1. “About Financial
